2012 (6) TMI 343 - HC - Companies Law

Sanction to a Scheme of Arrangement in the nature of Amalgamation - the transferee company and transferor companies are under the same management- Held that - The transferee company is not going to be dissolved and is retaining its identity and upon merger of other group concerns, the corpus of the transferee company shall be enlarged - the transferee company shall go into liquidation upon sanctioning of the scheme is completely ill founded - sanctioning of the scheme in no way affecting the rights if any of the objector - since construction of property booked at old rate is already completed and revenue is booked in the year 31.03.2010, there would not be any further losses and in fact huge revenue is under process and hence, the picture as depicted as loss in few of the transferor companies all the companies are under the same management and are family companies which are closely held companies and upon merger there is no interest of either of the members or public at large is going to be adversely affected and all the companies are going concerns and doing the business uninterruptedly - scheme of arrangement allowed.

Summary

Issues:
Sanctioning of Scheme of Amalgamation involving multiple companies.

Detailed Analysis:

1. Scheme of Amalgamation Proposal:
The petition seeks sanction for the Amalgamation of several companies under the same management for synergic benefits. The companies are engaged in construction and real estate businesses. The Court had earlier directed the convening of a meeting of secured creditors, dispensing with meetings of other classes, and appointed a Chairman for the meeting.

2. Meeting of Secured Creditors:
The meeting was held as directed, with two secured creditors present who voted in favor of the scheme. The Chairman submitted a report to the Court regarding the meeting's outcome. Subsequently, the petitioner filed a petition for the Scheme's sanction.

3. Court Proceedings:
The Court admitted the petition, ordered notices to the Regional Director, and scheduled a hearing. The petitioner complied with the Court's directions by publishing advertisements and serving notices. The Regional Director filed a report stating that the companies' affairs were not prejudicial to the public interest.

4. Objection Raised:
During the final hearing, an objector raised an objection related to a civil suit against the transferee company. The objection suggested that if the scheme is sanctioned, the transferee company might face liquidation. The petitioner filed an affidavit opposing the allegations, denying any substance in the claims and asserting that the transferee company would not be dissolved.

5. Explanation for Losses:
The petitioner submitted an affidavit explaining the losses incurred by some transferor companies. The losses were attributed to various factors such as accounting treatment, interest payments without recovery, and differences in land valuation. The affidavit clarified that the companies were family-owned, closely held, and operating as going concerns.

6. Court Decision:
After considering the objections and submissions, the Court found the objections baseless. The Court rejected the objections, stating that sanctioning the scheme would not adversely affect any rights of the objector. The scheme was sanctioned, with a direction for the petitioner to pay fees to the Regional Director's counsel within a specified timeframe.

This detailed analysis covers the key aspects of the judgment regarding the sanctioning of the Scheme of Amalgamation involving multiple companies, highlighting the legal proceedings, objections raised, explanations provided, and the Court's final decision.